Borrowers With Bad Credit Targeted By High Interest Loan Providers December 31st, 2008
With the current economic situation as it is, it’s difficult enough for someone who has a perfectly clean credit history to be accepted for a personal loan at the moment, but for an individual who may have a bad credit score due to loan arrears, or a County Court Judgement for example, it is even harder to obtain funding through a personal loan at anything close to reasonable rates of interest.
A recent report has now revealed that several loan companies which charge particularly high rates of interest for personal loans are actively target marketing those individuals with a bad credit rating, as these people are usually unlikely to be accepted by a mainstream lender, due to their financial past.
Many people who may be looking for a bad credit loan may be able to find a much cheaper loan by applying to one of the more reputable sub prime lenders and although there are now much fewer of these companies and they would certainly be paying a higher rate than someone with a clean track record, it is likely that they could still save more money than if they opted for a company who offers loans without any credit checks.
Many of these high interest charging companies are targeting more vulnerable, younger customers who may have a poor credit history, often through social networking websites, offering extra cash quickly and easily without any of the hassles of credit checks.
This target marketing is causing concerns for loan industry professionals, who believe many people are not getting the best possible deal available for themselves, apart from the fact that many of these borrowers will be applying for a high interest loan without realising the full implications of what they are taking on.
A spokesman for the credit reference agency Equifax said “We are starting to see a vicious downward spiral. Now legitimate sub prime lenders have been driven out of the market, borrowers are being forced to use less responsible sub prime lenders.”